Dollar Is Rebounding From Recent Weakness

Washington (Feb 4)  The dollar is bouncing back from some recent weakness against its major competitors on Tuesday. Yesterday's weaker than expected ISM manufacturing report contributed to the currency's recent decline. Meanwhile the decrease in factory orders reported today was less severe than economists had expected.

New orders for U.S. manufactured goods showed a notable pullback in the month of December, according to a report released by the Commerce Department on Tuesday, with the decrease largely due to a steep drop in orders for transportation equipment.

The report said factory orders fell by 1.5 percent in December following a revised 1.5 percent increase in November. Economists had expected orders to drop by about 1.8 percent compared to the 1.8 percent growth originally reported for the previous month.

The dollar has risen to around $1.3505 against the Euro on Tuesday, from an early low of around $1.3540.

Eurozone producer prices continued its downward trend in December, Eurostat reported Tuesday. Producer prices fell 0.8 percent in December from a year ago as expected by economists. Nonetheless, the pace of decline slowed from 1.2 percent fall seen in November and 1.3 percent drop in October.

The greenback has pared its gains against the pound sterling to around $1.6300 on Tuesday, from an early high around $1.6255.

The British construction sector expanded at the fastest pace in nearly six-and-half years in January as strong order growth boosted activity across all sectors, with residential building rising to a ten-year high.

Survey data released by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) on Tuesday showed that the seasonally adjusted purchasing managers' index (PMI) for the construction sector climbed to 64.6 in January from 62.1 in December. Economists had forecast a decline to 61.5.

The buck has rebounded from a 2-month low of around Y100.750 against the Japanese Yen, to around Y101.560 on Tuesday.

The monetary base in Japan spiked 51.9 percent on year in January, the Bank of Japan said on Tuesday, coming in at 200.414 trillion yen. That follows the 46.6 percent surge in December, which stood at 193.459 trillion yen.